ASX-listed West Wits Mining has issued 100.39-million unlisted options to Absa Bank – acting through its Corporate and Investment Banking division – to settle fees of R7.66-million payable to Absa under the R875-million senior syndicated loan facility.

Each option has an exercise price of $0.0185 and expires five years from date of issue, to match the tenor of the facility.

West Wits says Absa has been pivotal in advancing the broader funding package for development of the Qala Shallows gold project, in South Africa, noting that the financial services provider initiated discussions with West Wits in October 2024, when the company’s share price was trading between 1.4c and 1.6c to receive fees through an option allotment.

The company says Absa’s proactive approach to gain equity exposure to West Wits ahead of the facility’s credit committee approval in February this year underscored the bank’s support for the Qala Shallows project and the broader Witwatersrand Basin project (WBP).

It adds that the equity exposure provides a meaningful alignment of interests between Absa and West Wits as the company advances the Qala Shallows project, the first stage of the broader WBP, and positions itself for long-term growth as a midtier gold producer.

The exercise price of $0.0185 represents a 15% premium to the five-day volume-weighted average price (VWAP) of West Wits shares prior to the ASX announcement of credit committee approval for the facility on February 20.

While the current share price trades at about $0.05, West Wits says it is important to note that the pricing metrics for the transaction were established months earlier, prior to the facility’s credit approval and the recent gold price increase, and reflected Absa’s early confidence to forgo right to cash fees in favour of gaining an exposure to the project’s long-term potential.

The company says it welcomed Absa’s confidence and the opportunity it offered to preserve cash resources at a critical stage of the funding process.

It notes that finalisation of the option terms and legal agreements were delayed while loan documentation on the facility was finalised with all syndicate parties and executed in June.

“Absa’s proactive engagement and early flagged preference to forgo cash fees to secure equity exposure is a strong vote of confidence in our vision and execution.

“The equity settlement strengthens West Wits partnership with one of South Africa’s leading commercial banks as the company embarks on its strategic objective to become a midtier gold producer with the Qala Shallows being the first stage of development of the broader Witwatersrand Basin project,” says West Wits CEO Rudi Deysel.